THE solar retailer business can be risky, with changes to government subsidies and rebates altering the ebb and flow of the market, but Sun Connect hasn’t let this reality dominate its strategy.
THE solar retailer business can be risky, with changes to government subsidies and rebates altering the ebb and flow of the market, but Sun Connect hasn’t let this reality dominate its strategy.
The company flipped the industry’s more common pricing structure of high volumes and low margins around and is expecting a turnover of more than $25 million this financial year since establishing itself in 2008.
“All the government policy has revolved around dollar subsidies so we have made sure we are not vulnerable to dollar changes in subsidisation levels,” founding chief executive Mark Tuke said.
“If you boil it down to a plain and simple answer, we just aren’t cheap.”
Mr Tuke is quick to add Sun Connect isn’t expensive, however, with the company basing itself on offering quality and ongoing service availability and attaching a sustainable and realistic price tag.
“We are not expensive, we are good value, but it has been an uphill battle to justify that value to a fairly ill-educated market especially in the face of a lot of cheap competition,” he said.
“We refused to compromise on price and sustainable margins.”
Mr Tuke believes the boom-bust nature of the industry has been damaging for the image of solar, but said that offered Sun Connect an opportunity to develop its point of difference.
“It gets compared to the insulation debacle a lot, which is a shame. Solar is a beautiful concept, it is long overdue ... it makes perfect economic sense and perfect environmental sense but anything that is heavily government subsidised usually has this kind of overheated, boom and bust approach,” Mr Tuke told WA Business News.
“It has hurt people’s perception of how to invest in solar, most people have got it back to front. That has made us a niche.”
Customers of Sun Connect’s products have obviously had access to government rebates, but Mr Tuke isn’t too concerned about what will happen when rebates are reduced on July 1.
“We will just be doing the same thing we have always done, but with a lot less competition,” he said, pointing to how vulnerable some retailers are to the changes.
“We see it as a massive opportunity for growth, it is kind of the rebirth of the industry.”
Sun Connect directly imports manufactured solar components specified to Australian conditions.
“We have tried to find panels that, apart from being robust, are suited to the higher temperatures in Australia,” Mr Tuke said.
In line with that, the company introduced a five-year service level guarantee to keep with its core offering of continued service capability – something Mr Tuke said also set Sun Connect apart from its large competition base.
“We have always had to convince customers that it is all well and good if you are going to buy an appliance, but if you are going to buy something that has to last 25 years, it is an investment, it is connected to the grid and needs serious maintenance longer term,” he said.
“What happens when those retailers who are cheap to begin with go out of business and who is going to support you? No-one.”
Sun Connect is based in Perth but Mr Tuke works out of Melbourne, for recruitment reasons.
The company is still rapidly expanding and expects its turnover for financial year 2011-12 to exceed $50 million, with staff numbers to increase from 70 to at least 170 within the next two years.
Mr Tuke said hiring technically sound staff was easier on the more densely populated east coast.
“I have always found that Perth is awesome but if you want to recruit rapidly in technical areas it is good to have access to Victorian and New South Wales employment markets as well as the WA market,” he said.
The business has offices in Perth (led by Joe Thomas, Zamien Sumich and Gordon Impey), Sydney and Melbourne with one international office in Mumbai, and plans to open a UK office before the end of 2011.
“Apart from wanting to expand our business and geographical footprint, we also like the idea of having an international office and starting to export our model,” Mr Tuke said.
Currently operating in the retail market, Sun Connect it is preparing to enter the small to medium-scale commercial sector, a market that has become more attractive with the advent of federal government feed-in tariffs.
“The ACT and Victoria is where they are rolling-out the first commercial feed in tariffs, which has never happened previously. We want to try and enter that market more aggressively, because I think that is where the future is.”
